Inflation to cause further depreciation of the cedi this week; depreciated 0.85% to dollar last week

The Ghana cedi has returned to decline as it weakened to the dollar this week following the unexpected increase in inflation for May 2023.

Some analysts are expecting an increase in demand for foreign exchange and limited foreign exchange interventions by the Bank of Ghana.

The local currency lost marginal ground against the major trading currencies last week after the Ghana Statistical Service announced an unexpected increase in inflation to 42.2% in May 2023.

It closed the week with a 0.85% loss against the US dollar on the retail market, bringing its year-to-date loss to almost 15% in the retail market.

The local currency also depreciated by 2.51% against the pound and 0.79% against the euro.

However, on the interbank market rate last week, the cedi stood stable steadily trading at $10.97 to the U.S. dollar.

This is despite an injection of $32 million by the Bank of Ghana into the spot market.

It is presently hovering around ¢11.80 to the American greenback at the forex bureau.

Consequently, failure by the cedi to stabilize against the dollar may push fuel prices up, and worsen inflation which in turn increases the cost of living and doing business.

Bank of Ghana Exchange Rates pic.twitter.com/hSW8m08YQN

— Bank of Ghana (@thebankofghana) June 16, 2023